Spain looks to re-boot renewables as economy recovers

When the anti-wind and anti-solar brigade launch their regular attacks on renewable energy, Spain is one of the countries they like to cite to show that renewable energy really doesn’t work, and causes economic chaos.

It’s a view that displays as much ignorance about renewable energy as it does about Spain. Both seem to suffer from an accumulation of myth making, ideology and outright mischief. And renewable energy and Spain find themselves keen to put the record straight, and shatter those misconceptions.

One of the big myths is is that wind and solar energy don’t really work – an accusation that is casually thrown at the Spanish economy, too, courtesy of its holiday image, the traditional siesta and some unfortunate type casting on television.

But let’s tackle wind and solar first. Spain sources around 25 per cent of its electricity from wind and solar and was one of the first countries to invest heavily in wind energy, thanks to the paucity of its own resources: it has little coal and hardly any gas.

Is wind and solar causing a problem for Spain’s grid, even when it reaches more than 70 per cent of demand, as it does now quite regularly? Not at all, says Miguel Ezpeleta, the director of Acciona’s Global Control Centre for Renewable Energy near the company’s headquarters in Pamplona.

“We’ve have been responding to sudden changes in demand for years,” he says from the heart of the control room, where he can see the real-time output of all the company’s installations across the globe, including Australia. Like South Australia, Spain is a relatively isolated grid, with small connections to France on one side and Portugal on another.

“Responding to changes in supply is no more difficult. There is really no issue.” And, Ezpeleta adds, no real impediment to achieving 100 per cent renewable energy; something he and others think is inevitable as the coal plants are closed, nuclear phases out and expensive gas is also substituted.

It’s a thought echoed by the controller of the country’s largest solar tower plant with molten salt storage, the 20MW Gemasolar power plant (pictured above), and also supported by recent analysis from the CSIRO and Australia’s network owners.

In the short term, however, there is no doubt that the fortunes of wind and solar and the Spanish economy have been heavily intertwined. But not in the way that is often portrayed. It was not wind and solar that brought about the collapse of the Spanish economy, as many suggest. It was primarily a property bubble.

The decisions taken then to pull in the purse strings, and in the case of the conservative Coalition government to end renewable energy subsidies, brought the domestic renewable energy industry to an effective halt, as this graph above from the IEEFA highlights. Expansion of wind and solar effectively came to a stop in 2012/13 when the subsidies were ended.

But substantial subsidies to the fossil fuel industry were retained. A new report from IEEFA highlights these subsidies totaled about €4,500-€4,700/year to support coal and gas plants, most of which stand perfectly idle under a bizarre and inefficient “capacity” payments plan, and in an attempt to try to force coal plants to feed Spanish coal into their boilers, rather than cheaper imported coal.

Those subsidies are now about to come to an end, and Spain is also about to reboot its renewable energy industry, laying out plans to hold reverse auctions for some 3,000MW of large-scale wind and solar to bring its total renewable share (including heat and transport) to 20 per cent.

Australia also suffered an investment hiatus as its conservative government played around with policy controls. The difference with Spain is that it has managed to create a vibrant export industry, and Spanish companies rank among the biggest wind and solar developers on the international stage.

At Elcano, an independent think tank, director Mario Esteban says the property bubble and its aftermath heightened the divide between the “incumbents and the outsiders” – a situation highlighted by the recent political divide and the emergence of populist parties on both the left and the right.

“The only way to get out of our economic crisis was to look for external markets,” says Jaime Garcia-Legaz, the secretary of state for trade.

And, he says, this international competition has helped Spain set new benchmarks for productivity increases – beating Japan and South Korea and becoming the highest in the OECD.

Spain, it is often overlooked, is the EU’s fifth biggest economy, the second biggest exporter after Germany, and the second biggest car-maker in Europe, after Germany, and outstripping France and Italy.

It is also one of the staunchest supporters of the EU – favouring a hard exit for the UK because it refuses to cede on free movement. From 1998-2009 it had one of the highest immigration rates, per capita, in Europe.

GDP fell into negative territory in 2013 – but has rebounded to 3.3 per cent by 2016. Unemployment is still high at 20 per cent, but well below its peak (it also doesn’t take into account significant seasonal work), and the budget deficit is down to 5 per cent of GDP from 11 per cent.

“Spain has a tradition of good engineering, particularly in public works,” Garcia-Legaz says. And it has applied this to the energy sector. The renewable energy policy, he says, was deliberately calibrated to create a sustainable industry, not just capacity installations.

That resulted in the creation of many Spanish renewable energy companies that have become leading developers of wind and solar projects across the globe. Acciona, for instance, is active across the world for many years, and Gemasolar is finally exporting its product to the massive Noor project in Morocco.

Australia has been one of their target countries, despite the uncertainty around the renewable energy target, the scrapping of the carbon price and the vacillations over future policy measures.

FRV has been active in the solar market, building what was then Australia’s biggest solar farm (Royalla, 20MW), and then the biggest with single axis tracking (Moree, 57MW), and has other projects planned in Queensland.

Abengoa was pursuing a solar thermal project in Western Australia before running into financial difficulties, while Gamesa has since been absorbed by Siemens.

Others are also interested. In a presentation hosted by Austrade and the Australian embassy in Madrid in October, some 28 companies turned out. More turned up at an event hosted by La Camara (the Spanish Chamber of Commerce in Australia) in Sydney early in December.

Giles Parkinson is founder and editor of Renew Economy, and is also the founder of One Step Off The Grid and founder/editor of The Driven. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

Giles Parkinson is founder and editor of Renew Economy, and is also the founder of One Step Off The Grid and founder/editor of The Driven. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

28 Comments

Well good on Spain . When this solar salt plant was brought into production had a Spanish mate a dr who said this was the best thing ever to happen in spain it made them the world leader in solar technology and less need for coal which his country had little of. so by reading this i now understand why besides clean energy why a lot of countries should go this way where the amout of daylight sun is available and backed up with wind energy where that is an bbbbb

John McKeon 3 years ago

A friend of mine owns his own engineering company in Queensland. He told me quite some time ago about his visit to Spain and conveyed to me the excitement of the solar – with storage – power developments unfolding there. Great article, thank you.

Ian 3 years ago

There is a peculiar rivalry amongst Europeans. Each country thinks its the best and the others second rate. All rather strange.

Paul W. 3 years ago

Yes, that probably applies to France and the UK whose economies are of similar sizes. But when according to the IMF, Spain’s GDP is 1.24 trillion USD compared to 3.67 trillion USD for Germany in 2016, you can’t really say it’s a matter of opinion!

TatuSaloranta 3 years ago

Heh. I am not sure there is anything unusual here: neighboring countries do this everywhere, and in US states, metropolitan areas compete for bragging rights, ranking order, who has best barbeque, whatever. Despite some political statements there is very little “european” anything; perhaps this is where misunderstanding comes from. In US, for example, state-level differences are smaller and citizens consider themselves “americans”. In EU, very few think of themselves as “europeans” in same sense.

It not the largest car maker either, that title also goes to Germany in both absolute and dollar terms.

Hans the Elder 3 years ago

the article says: “the second biggest car-maker in Europe, after Germany,” not “the biggest car-maker”

Alex 3 years ago

The reference to biggest EU economy and biggest EU car maker have been (quietly) updated to fifth largest and second largest respectively, the original article was incorrect, hence the comments. I’m also suspect of the second largest EU exporter claim, that title seems to go to France or the Netherlands, depending on source.

Hans the Elder 3 years ago

Such changes should indeed be mentioned.

You are right regarding the exports. Germany, UK, Netherlands, Italy and Belgium had larger exports in 2015 than Spain:

(select the exporting country, all trading partners, the year and look for the total export at the bottom of the list that appears)

Hans the Elder 3 years ago

the article says “fifth biggest economy” not “biggest economy”

Paul W. 3 years ago

Anyway, my main point is that obvious factual errors in an article undermine the other claims, which otherwise might have been taken on trust.

Jan Veselý 3 years ago

They screwed the FiT scheme which is difficult for management. Now, they will try auctions which should be more idiot-proof.

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OK, seriously, how can you write an entire article about Spain and renewable energy and not mention Rajoy’s TAX ON THE SUN? The one prohibiting people from going off grid, with million-dollar fines for unlicensed solar panels?

Has it been repealed yet? There’s been lots of TALK of repeal, but I can’t find any record of it actually being repealed.

Could this indicate that wind projects can now be developed subsidy free in Spain? Or, as it is called Valiente which Google translates as “brave” is it instead the sign of a company “gambling” on subsidies being reinstated?

Nassim7 3 years ago

Every RE plant needs fossil fuel plant backup. Even without overt subsidies, RE would make little sense economically if it had to pay directly for this backup.

The whole idea that one Watt is of equal value to another Watt – at a different time of day or year – is a nonsense. Sometimes RE has to pay to send unneeded electricity to the grid. It will always be like that unless you can persuade people and factories not to use electricity when there is no wind or sun.

Brian 3 years ago

Every baseload plant needs load following and peak reserve generators.

Nassim7 3 years ago

Shame how the sun only seems to shine for part of the day in sunny Spain. I guess they will have to go back to having dinner long before 10PM.

Did you even read the article? Check out what Miguel Ezpeleta has to say about this: balancing of varying load with generation is absolutely nothing new. More electricity tends to be used during daytime; there is seasonal variation. These must be balanced regardless of renewable energy. With CSP solar generation could become load-following: with better grid interconnections (esp. with France, but eventually Morocco too) it is possible to balance out generation (esp. wind); and some pumped-hydro storage (along with existing hydropower) will go a long for storage.

Comparing electricity prizes to Poland, Turkey and Hungary is bordering on intellectually dishonest; they have their old paid-off dirty plants, with plenty of overcapacity (inefficient heavy industry, much of which has gone out of business now, required more energy than is needed these days). By nasty pollution they can indeed crank cheap electricity for a while.

Nassim7 3 years ago

Even the most fanatical believers are beginning to doubt. And all it took was a few cloudy and wind-free days in Germany’s December

“Insanity: doing the same thing over and over again and expecting different results.” – Albert Einstein

TatuSaloranta 3 years ago

You link to a single article and claim that this was somehow consensus. It is not. Cloudy, wind-free days happen occasionally — not often, sometimes — and these can and will be covered: currently by gas peakers (and sometimes even moth-balled coal burning plants). If not covered by imported energy from places that do not suffer from similar atmospheric problems.

But such cases are not common, and would affect 1-2% of time. They can be covered by fossil fuels now, and with various storage methods in future (eventually, power-to-gas, if not completely with pumped hydro).

But once again I ask: DID YOU ACTUALLY READ what the actual expert from grid operator said? Instead of linking to yet more bullshit articles, explain to me why grid operators’ lack of concern (“we can deal with this — these are not new problems”) should be dismissed. Your repeating of personal opinions (supported by carefully selected small selection of opinions of similarly minded individuals) is not going to help convince me or anyone else here.

Nassim7 3 years ago

Thank you for confirming that “Renewables” need 100% backup from fossil fuels – unless one is happy with the lights going out 1-2% of the time. It can take days to restart the grid after a blackout – witness South Australia recently.

FYI, industrial civilization is entirely dependent on 100% availability of a secure and stable electric supply. Anything less and your country will become like India

TatuSaloranta 3 years ago

I certainly agree in that reliable and stable (from user perspective) electricity supply is a requirement for industrial civilization.

And on backup… yes, I agree to a dgree. Fuel-burning (and on short term, fossil-) plants are indeed needed for backup for now. Over time fuel mix can move more towards bio-fuels (in some countries already done, Sweden, Finland); so fuel source need not be fossil (or nuclear).

Now: I am not as sure about 100% backup — there are forms of renewable energy like geo-thermal, tidal, landfill gas that are not variable in same way — but for sure a significant percentage of backup is needed and makes sense.

I don’t quite understand how this would mean that “renewable energy can’t work and is failing”, but at least we agree on some aspects.

Nassim7 3 years ago

This article is misleading on so many levels that I am obliged to comment once more. My apologies.

The statement “Spain … as economy recovers” is manifestly false.

Spain has a youth unemployment rate of over 40% – despite many “make fake job” programs.

All the subsidies that have encouraged RE are about the disappear. A big reason for the failure of the Spanish banking system is the uneconomic lending to RE.

TatuSaloranta 3 years ago

“A big reason for the failure of the Spanish banking system is the uneconomic lending to RE.”

Do you have any supporting articles that explain how this would be true? As article suggests, overheated real estate market has been commonly pointed as the main reason — this is by far the most common reason across the globe for last 10 years.

About the only reason RE financing was problematic had nothing to do with banks RE developers, but rather with retroactive (and by most outside experts, illegal… for western legal system at least) changes to support schemes — guaranteed rates for production turned out to not be guaranteed due government breaking their own commitments, changing laws retroactively. This did indeed lead to catastrophic consequences; but it is not reasonable to expect developers and investors to expect that a western democratically elected, law-bound government should do that.

As to “subsidies that have encouraged RE”… what subsidies? My understanding is that there isn’t much support to begin with; but as importantly, due to governments actions, there has been little development as no one trusts the system, or stability of support system. In that sense it makes little difference if subsidies exists or not if they have not been encouraging RE development at all — their removal would not change much. Conversely, if trust for government in this are did improve, renewable energy development would resume as cost efficiency has improved a lot over past 5 years.